Quantity Price/cost
Supply = Long Run Marginal Cost
q*
p*
Resource cost of producing q*
Producers’ surplus (rent) Consumer’s surplus (rent)
15 Demand
Panel 3
Demand below Average Cost Good not provided or consumed at any price
Subsidy lowers effective cost Good now provided and consumed at price P
demand average cost
P
By the Q consumers valuing it at P or above
Consumers valuing it below P will not purchase
Q
Consumer Surplus
Will not purchase
Panel 4
$
Quantity P
Q P1
Q2 Q1
Panel 5
Panel 6
Panel 7
Panel 8
$
Quantity
Urban cost
PU
Q
Rural cost
PR
Q2 Q1
urban demand rural demand Universal
Price PK
Panel 9
$
Quantity
Urban cost
PU
Q
Rural cost
PR
Q2 Q1
urban demand rural demand Universal
Price PK
Panel 10
$
Quantity
demand
Average cost P High
P Low Cost Q
Q QH
profit
loss loss
Panel 11
$
Quantity
demand
Average cost P High
P Low Cost Q
Q QH
profit
loss
4. Conclusion
There are a large number of „digital divides‟ over many dimensions and a large number of policies targeted at ameliorating them. They have been a feature of telecommunications policy debate for a long time. Furthermore, they do not appear to be diminishing in either magnitude or number, despite the large amount of resources directed towards „closing‟ them. This suggests a
„failure‟ of many of the policies adopted to date. This paper has used a policy analysis critique to highlight a number of reasons why the divides persist.
Principal among these is that most policies focus on closing differences in measures such as infrastructure uptake, despite the fact that it is not clear how pursuit of closing indicator statistics is realising the ability to achieve the overarching goal of increased economic and social wellbeing. First, it is not immediately apparent that differences in uptake amongst different groups are always economically significant. Indeed, trying to correct differences that arise simply from the heterogeneity of individuals in the guise of redressing one uptake divide (e.g.
urban-rural) runs the risk of making other divides worse (e.g. rich vs poor). Second, divides in infrastructure uptake do not take account of the consequences of the economic and social effects that arise from the use of the applications enabled by internet access. These economic consequences may push in very different divide directions.
Furthermore, existing policies may have substantial effects on the ability to close divides.
Implementing new policies to address the divides, without also reconsidering how the extant policies contribute towards their creation, means the new policies may be doomed to fail, and potentially cause substantial additional costs to be wasted in the process. If the negative divide effects of the extant policies are high, then it is imperative that they be reassessed. No policy should be beyond reassessment, it also signals a need to evaluate digital divide policies in their wider context, not just narrowly in relation to individual metrics in alocalised context.
This paper suggests that improvements of this sort in the digital divide policy-making process may lead towards both resolving persistent divides and enabling the economic and social benefits that their resolution is anticipated to generate.
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